How to calculate the valuation of a company? Calculating the valuation of a company is a process of analyzing the intrinsic value of a company by combining qualitative and quantitative methods. Qualitative and quantitative analysis includes the analysis of the company's financial report data, management, ownership structure, industry prospects, external environment and macro-economy. Through the analysis of these factors, we can judge whether the company's net profit can continue to grow. So the basic logic of calculating the company's valuation is to calculate the company's future cash flow discount. All cash flows generated during the existence of an enterprise are converted into present value through a reasonable discount rate, which is the value of the company. Buffett said that the free discounted cash flow method method is the most ideal method for company valuation. To evaluate the value of a company, we must first estimate the free cash flow that the company can generate in the future, and then convert it into the present value. Company valuation = free cash flow annual discount rate plus permanent value discount rate. In the formula, the company is divided into two types: the high-speed growth period in front and the sustainable growth period in the back. The calculation method of sustainable value is to substitute the free cash flow in the last year of the previous section into the formula of sustainable value, and sustainable value = free cash flow/(discount rate-sustainable growth rate). So it takes four steps to calculate the valuation of a company. The first step is to predict the company's free cash flow in the next 10 year; the second step is to convert these future free cash flows into present value; the third step is to calculate the company's sustainable value and convert it into present value; and the fourth step is to add them together to calculate the company's value.